Annual Report 2017-18 3

BEING FUTURISTIC. BEING TMRVL. ANNUAL R EPOR T 2 0 17-18 Being Futuristic. Being Fashion is an attitude with a TMRVL. perspective. At The Mandhana Retail Ventures Limited (TMRVL), we are democratising fashion, making it accessible across social and economic boundaries, while contributing to the society’s well-being. We also have a vision to scale up innovation, expand categories and streamline operations to deliver value for our stakeholders. We are achieving this by reach deeper into India and enabling, empowering and inspiring people through fashion that helps them ‘look good and do good’. In the changing retail landscape due to dynamic shifts in consumer behaviour, TMRVL is geared to develop wearables that make business sense, are consumer- focused and contribute meaningfully to societal welfare. We are redefining brand engagement through a unique approach that focuses on social issues and gets customers involved in changing our society for the better. We are a brand with a soul and our consumers are the extensions of our label’s narrative. In its essence, TMRVL is dynamic, futuristic, customer- centric and charitable. We are expanding our social outreach and creating products that are eco-friendly and sustainable. Our organic growth into a company that competes on its own terms focuses on delivering goodness through a well-crafted business strategy. 2 THE MANDHANA RETAIL VENTURES LIMITED About TMRVL TMRVL at a glance. At The Mandhana Retail Ventures Limited (TMRVL), it has been our endeavour to offer the best in fashion to our customers. We are on a journey to create a global brand that uses sustainable textiles and offers unique and trendsetting designs. Over the years, we have grown to provide the best shopping experience to consumers through an expansive retail presence across geographies. Our brand ‘Being Human’ and our association with the ‘Being Human – The Salman Khan Foundation’ champions a differentiated proposition of ‘fashion with a cause’. OUR BRAND – BEING HUMAN Being Human is dear to millions of customers, with Bollywood celebrity Salman Khan as its effervescent brand ambassador. Our brand is a perfect blend of fashion and ethos, an extension of the charitable trust ‘Being Human – the Salman Khan Foundation’. The Foundation is committed to providing a better life to the underprivileged and the proceeds from its sales carry forward this mission. The brand focuses on customer convenience through leveraging digital platforms. We witnessed a spike in sales through e-commerce tie-ups with Myntra, Abof, and Jabong. Our partnerships with widespread retail chains such as Lifestyle, Shoppers Stop, Splash, Jade Blue, All That Jazz, My Store and Wardrobe, are strengthening our brand prominence. CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 3 Investment Case WHY INVEST IN TMRVL? A DISTINGUISHED VAST NETWORK BRAND Our ever-expanding network of retail chains in the domestic as well as Being Human delivers top quality and international markets gives us flexibility to trendy designs at various price points meet demands from across nations and to cater to a large section of customers. helps improve our distribution mix. Our association the Bollywood superstar Salman Khan is a major pull. 57.29% 600+ Gross Profit Margin POS STRONG BALANCE SOCIAL SHEET RESPONSIBILITIES We have a strong balance sheet with Rightly called ‘a clothing line with a NIL debt to equity ratio. Our operational heart’, Being Human is known for its efficiency and short-term fund-raising charitable contributions for the social practices helps reduce cost. cause of education and health of the underprivileged. 5.75% Negligible debt Royalty is paid to the Being Human Foundation GROWTH PLANS STRONG CONNECT We aim to grow stronger by We are optimistic of our licence renewal increasing the number of retail points. with Being Human Foundation even We also have plans to introduce a beyond 2020. We are focused on new brand in FY 2018, which will be strengthening our relationship with a boost to our growth meters. our existing as well as new partners, retailers, distributors and customers. Expanding in Tier II and 900,000 Tier III Cities Loyal customers 4 THE MANDHANA RETAIL VENTURES LIMITED Key Non-Financial Highlights Our competitive strength. INTERNATIONAL STORES Number of stores outside India 2018 167 2017 167 DOMESTIC STORES Number of stores in India 2018 443 2017 418 NO. OF EMPLOYEES DISTRIBUTION PARTNERS E-COMMERCE PARTNERS Our people strength Number of partners assisting in Number of partners in the distribution of our products e-commerce platform 2018 2018 2018 6562017 606 72017 10 3 2017 4 CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 5 RETAIL SELLING POINTS Number of stores where our products are sold (online and offline) 2018 610 2017 585 EXCLUSIVE BUSINESS OUTLETS (EBOs) EBOs of the Being Human brand 2018 34 2017 29 STORE-IN-STORE (SIS) SIS wherein clothing of Being Human brand is housed along with other brands 2018 372 2017 351 FRANCHISEES Number of licences given to third parties to sell our products under our brand name 2017 2018 27 24 6 THE MANDHANA RETAIL VENTURES LIMITED CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 7 Product Categories What we offer. Our one-stop-shop concept offers a varied range of products under the menswear, womenswear and accessories categories. Revenue (%) Menswear 90 Womenswear 5 Accessories 5 CATEGORY-WISE BUSINESS AND PRODUCT DIVISION Business Division Category-wise (%) Menswear 85 Womenswear 15 Menswear Category-wise Division (%) Womenswear Category-wise Division (%) T-Shirt / Polo 50 Sweaters 2 T-Shirt / Polo / Shrugs / Tops 40 Shirts 20 Hoodies 3 Blouse 20 Denim 12 Jackets 3 Dress 15 Non-denim 7 Innerwear 0.5 Denim 7 Tracks 3 Trackpants / Shorts / Pyjamas 12 Sweaters / Sweatshirts 6 6 THE MANDHANA RETAIL VENTURES LIMITED CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 7 Market Presence Our global footprint. We have a strong global network with 610 points of sales (POS) in 15 countries and strong digital presence with e-commerce in 3 markets. We are eyeing tie-ups with international retail giants in the US and South-East Asia to boost exports. OUTLETS 35 5 Europe 443 Fiji India 3 1 Nepal 125 Mauritius GCC Note: Map not to scale 8 THE MANDHANA RETAIL VENTURES LIMITED CORPORATE OVERVIEW | ANNUAL REPORT 2017-18 9 Chairman’s Message C h air m an's Message Last year when I wrote to you, I was optimistic that our economy will grow at 7%+ in FY18 though I had not ruled out some headwinds. As it turned out the economy couldn’t gather steam as expected due to residual effects of demonetisation and some problems in GST implementation. The Gross Domestic Product (GDP) growth rate was lower at Your management has evolved a market sensing system that 6.7% and that impacted your Company’s business. At micro will keep the Company product portfolio in sync with changes industry level, the competition was intense with ‘market share at and capitalise on them. any cost’ strategies employed by global entrants in the market. The combative market participants advanced the end of season LAUNCH OF ‘CORE LINE’ sale dates and the duration of such sales also increased. This Your Company during the year has formulated the ‘Core Line’ meant larger proportion of volumes were sold at discounted design concept. ‘Core Line’ has a simple design elements that prices. Despite competitive intensity, the Company volumes can be assembled into basic products that can be offered year grew by 11% in domestic market and by 15% in exports. round at multiple price points. This will enable moderation in This represents domestic market growth rate at 1.65 times the discounting and result in better inventory turnarounds. Your GDP growth rate (6.7%) and 1.2 times the rate forecast (9%) management expects the ‘Core Line’ to account for 1/4th of for the apparel industry by experts. And this signals steadily Company volumes in near future. ‘Core Line’ will be launched increasing market penetration for the Company brand which is within next 45 days. good news indeed. Higher discounts affected the revenue growth with a marginal reduction of 0.05% in revenue over last year. Company revenues for the year stood at C259.44 crores. The Company management had to contend with supply chain problems; inadequate working capital took its toll delaying the new season supplies to the stores. Needless to say the Company missed selling opportunities during some crucial days of the season. The pressure on net realisations due to higher discounts was exacerbated by some significant increase in employee costs. The Company has suffered significant drop in EBITDA margins this year under review. Your board and the management is working to rectify structural issues within the organisation as well as with working capital finances. THE MARKET AND THE CONSUMER By all accounts, the long-term trends in the Indian apparel market continue to be positive. The market is expected to grow between 9-10% on CAGR basis to year 2020. Increase in personal incomes, higher aspirational levels in Tier II, III and IV towns and all round growth in consumerism will continue to drive the growth in apparel market. However, the segments within display differential growth rates. The product segments where your Company always had significant offerings namely denim wear and T-shirts for men continue to be high growth market segments expected to continue to grow at 14%. Active wear market has emerged as a high potential category due to the boom in fitness and healthcare related consumption. Your Company is well placed in this segment due to its association with Mr. Salman Khan who is universally followed for his fitness and sculpted physique. While these are broad trends, the market is given to rapidly changing styles and preferences.

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